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Warehouse cuts profit guidance, blames margin pressures

3 Feb, 2012 9:00am

2 minutes to read

Mark Powell, chief executive of The Warehouse, said today that margin pressures mean the company now expects full year adjusted net profits to be between $62m and $66m - down from the forecast $70m. Photo /Paul Estcourt.

The profit warning comes a day after Briscoe Group, the home ware and sporting goods chain, boosted fourth-quarter earnings, and flagged annual profit would be at least 25 per cent higher than a year earlier.

Warehouse sales rose 4.2 per cent in the three months ended Jan. 29 compared to the same period a year earlier, with same store sales up 3.1 per cent. Warehouse Stationery sales gained 2.5 per cent, and same-store sales gained 4.4 per cent.

Chief executive Mark Powell said "trading conditions were quite challenging in the lead up to Christmas, but retail sales eventually proved buoyant through the key late December period and in January."

He singled out the retailer's apparel range as an area that came under particular margin pressure through period.

Retailers have had to contend with tepid consumer demand as households eschew taking on new debt in favour of repaying outstanding loans. That's seen a major build-up in inventories, which bolstered economic growth through last year, and forced retail stores to discount their goods in an effort to shift them.